Your business may thrive, survive, or fail because of cash flow. The way you manage cash may either create financial flexibility or constrict it. Some may argue that cash flow is more important than revenue. Cash flow’s importance is undisputed. That’s why managing cash should be one of the top priorities of your company.

 

Here are some tips you can follow to keep your company’s cash flow positive.

 

Keep Accounting Books Updated

You’ll need the latest financial information so that you can keep your accounting books updated. Updated books provide you with real-time (or at least the most recent) data when you make decisions about spending, budgeting, planning, strategizing, and implementation of policies. If your team lacks the skills and experience to update your books, consider outsourcing bookkeeping tasks to a third-party service provider. Outsourcing is a viable and cost-effective way to do bookkeeping and other accounting-related tasks. An outsourced virtual bookkeeper is a “plug and play” solution because you don’t need to train them. Once you hire them, they can start working on your accounting books immediately.

 

Generate and Review Cash Flow Statements

It’s easier to review and analyse data when you are looking at a visual presentation of it. Data visualisation allows you to pinpoint trends that are possibly affecting your cash flow in a negative or positive way. It also enables you to identify the causes of these trends and whether or not they are within your control or area of expertise. Accounting software allows you to input financial data and generate reports you can use for your team’s analysis. Cloud-based software enables you to store data securely and access it at your convenience.

 

Improve Accounts Receivable Collection

One of the best practices of managing cash flow is faster accounts receivables collection. Your business might be generating high revenue but if most of this are accounts receivables, you’ll have poor cash flow. Improve your business’ policies regarding payment terms. Establish a payment period that customers should follow. Include clauses about penalties and additional fees for late payments. If they want to extend the payment period, consider renegotiating the terms but include interest. Incentivise customers to pay early. Offer discounted prices or special inclusions.

 

Identify Ways to Cut Expenses

It will be difficult to reach your cash flow objectives if you spend too much. Identify processes, campaigns, strategies, workflows, or others that use resources inefficiently. Once you determine the cause of overspending, address them by finding ways to improve efficiency, designating tasks to employees with the skills and experience to handle them, or changing or removing them.

 

Find Ways to Boost Cash Flow

Your cash flow might need an injection of new funding. Diversify your products or services to reach more customers or boost repeat purchases. Consider opening a new branch in a different city to tap into a new market to diversify your sources of revenue. Find a business partner with complementary expertise and work with them to improve your own products or services.

 

Managing cash effectively (or ineffectively) can make or break your growing business. The tips mentioned above provide you with a few best practices when it comes to cash flow management. If you want to outsource your bookkeeping and accounting, we at Robokkeeper can provide you with the expertise you need. We offer first-rate small business accounting services.